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What do people think about Bitcoin?

Discussion in 'BBS Hangout' started by Spooner, Jan 25, 2014.

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What is the fate of Bitcoin?

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  1. Invisible Fan

    Invisible Fan Insider Newsletter™ 2X Diamond Member

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  2. Joshfast

    Joshfast "We're all gonna die" - Billy Sole
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  3. dachuda86

    dachuda86 Member

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    Not Bitcoin but appplies to Bitcoin right now.
     
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  4. Ziggy

    Ziggy 99ers STAND BY
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  5. omgTHEpotential

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    Posted this in the NFTs thread, but would like to post it here as well since it's about Bitcoin. Great talk.

     
  6. RC Cola

    RC Cola Contributing Member

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    Um, any energy/electrical engineer type people able to help me out with something here?

    Around the 31:04 mark, one of the guys says we know you can't move electricity more than 500 miles. That seemed odd to me, and I Googled around, and I see multiple references to existing lines over 2000km long. A Wiki article gave figures of 4000-7000km as the limit (assuming you still wanted it to be cost efficient). I'm wondering if I'm missing something, or if that is just number he pulled out of thin air. I understand things in practice might be different than theoretical limits, but that's nearly an order of magnitude off (at least from the Wiki article).

    I only watched the energy part and wasn't really persuaded at all, but I'll try to watch the whole thing later at some point. Won't bother going into detail unless someone really wants me too. I'd mostly be repeating what I've said previously.

    I would appreciate it if I learned something about electricity transmission though. Might come in handy with the upcoming infrastructure bill.
     
  7. Commodore

    Commodore Contributing Member

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    There is so much energy that is stranded (either because it isn't cost effective to transport, or because it isn't needed at the time it is generated, like wind/sun).

    All of that stranded energy can now be converted to bitcoin on-site. Easy money.

    ie. natural gas that would normally be flared converted into bitcoin

     
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  8. Ziggy

    Ziggy 99ers STAND BY
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    These - BTC is an energy suck - hit pieces come out every 2 weeks now. IT causes Bitcoin to drop, Michael Saylor buys $1.5-5mil more, then the price goes back up. Rinse and repeat. Ignore the noise. Bitcoin might fail, but it wont be because of energy.
     
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  9. Space Ghost

    Space Ghost Contributing Member

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    He might be getting into technicalities, which I really dislike. Context is everything.

    Dynamic transmission line rating

    A whole basket of variables. Transmission lines can move massive amounts of energy across vast distances while service/last mile lines have much shorter limitations.
     
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  10. RC Cola

    RC Cola Contributing Member

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    I understand the concept of stranded energy. I just wasn't given any evidence that there's actually that much of it, and that Bitcoin/crypto mining is the best way to utilize that energy. Perhaps it was an innocent mistake on his part (something I might question after looking into his background to be honest), but the fact that he tried to say 500 miles was the limit for moving electricity vs the apparent actual limit being closer to thousands of miles implies to me that this might not be that huge of a factor. But maybe I'm wrong.

    I see this brought up quite a bit with Bitcoin/crypto mining. Admittedly, I haven't really looked into this much, but wouldn't it possibly apply to pretty much any kind of large server farm? Like why doesn't AWS, Azure, etc., take advantage of this stranded energy? Or maybe they do? Although if they do, that would mean we'd have other (IMO better) usages for this stranded energy. I can possibly think of a few reasons (i.e, not as practical/scalable as it might seem), but again, not something I've thought much about.
    To be clear, I actually think Bitcoin and other crypto will likely do very well, despite my better wishes. I think there are huge problems with these things, but I don't think that will stop people from investing heavily into them (and doing very well).

    The big Bitcoin influencers kinda remind me of alternative medicine gurus to be honest. Even though I disagree with a lot of what is said, I'm actually very impressed by their arguments.

    Thanks, assuming I'm not misunderstanding, that makes a lot more sense to me.

    So unless I'm missing something, in order to be truly "stranded", you'd have to be thousands of miles away from any kind of population center that could use the electricity, no? Some of the longest transmission lines I see appear to be in rural parts of South America, Africa, China, etc., so I'm struggling a bit to think of any place that couldn't just do what those countries did. You'd have to have an energy source more rural and secluded than those places in order for their argument to work...unless I'm missing something?
     
  11. Xerobull

    Xerobull Salve Dicit Mater Tua
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    Good watch on the BTC cycles:

     
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  12. Space Ghost

    Space Ghost Contributing Member

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    Most 'stranded' energy is found at the source which is usually out in rural areas. Are you going to convince operations to live out in the middle of no where without everyday basic resources? A whole infrastructure is going to be required to support operations. That is likely one of the reasons why many server farms are found in Seattle. Energy is very very cheap with the massive amounts of hydro.

    Im a little hesitant to use the word stranded. If stranded simply means its it costs more to produce than to sell, I can go with that definition. Depending on generator source, it could be a variety of reasons. Wind, Solar and Hydro are supplement sources, not primary. Wind and Solar are grounded when there is no demand (because there is too much primary) and Hydro is never run at full capacity or sometimes has to be cut for ecological reasons. Energy is traded on the open market. If energy prices get too low, some generators have to shut down because they can not afford to run operations.

    The more a novice delves into the energy sector, the more they find its a lot more complex than they realize.
     
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  13. Dr of Dunk

    Dr of Dunk Clutch Crew

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    He kind of gets into it in here : https://chowcollection.medium.com/t...-digital-monetary-energy-network-ea8f51c914e9

    It's not exactly true, of course, but I'm not sure that was entirely his meaning.
     
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  14. RC Cola

    RC Cola Contributing Member

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    That's actually a point that I considered when I originally heard this idea of putting Bitcoin mining operations near these untapped magical renewable energy sources in the middle of nowhere. I agree that it would be difficult to convince operations to live in those conditions to maintain something like an AWS server farm, but then again, wouldn't that apply to Bitcoin operations too? Maybe I'm missing something, but surely someone has to be available to handle repairs, upgrade/replace racks over time, etc. It seems like a pretty big undertaking, and I didn't hear any solutions for how to handle this in these thought experiments.

    If it makes sense to do it for Bitcoin/crypto, it should make sense for pretty much any sort of large-scale, energy-intensive data processing, no?

    Given that definition, I can be more accepting of the idea that we have a lot of "stranded" energy (though I didn't get the impression this was the original intention). I'd still be curious to know how much energy we're really talking about though, and I'm also aware of the fact that there's a big push to use batteries to solve some of these problems (primarily with renewable energy). I agree with some of the flaws of solar, wind, etc., which is actually why I'd strongly push for more nuclear energy as well. Possibly even a small amount of fossil fuels for on-demand usage needs, though ideally we could make improvements to our grids and better leverage batteries to minimize their usage. There's definitely no one perfect solution. We need it all. Even different "types" of batteries, let alone different forms of energy production.

    Until we get to the point where we can greatly minimize this form of stranded energy, then I think I would be more accepting of an idea where we used this energy for mining/crypto networks in general (or AWS/Azure/etc. :p). I do think this would be a temporary solution though, as I don't think we should actually continue to operate with so much "stranded" energy unable to used for the majority of applications. So I think Bitcoin and crypto in general should still find some ways to minimize energy consumption in the long term, and that's assuming the vast majority of energy going into these operations actually used this (hopefully renewable) stranded energy. I'm far from convinced that's the case.

    I do agree that this topic is way more complicated than it appear, and while I have tried to spend time in the past diving into it (outside of the scope of crypto actually), I freely admit to being fairly ignorant on things as a whole. That's why I like to keep the arguments somewhat simple, which hopefully removes the need to dive too deep into those complexities.

    On a side-note, you kinda touched on similar themes in the other thread, and I'm hoping to find some time to respond to that at some point as well. :)

    Thanks, that at least kinda explains where he got that number. Yeah if he meant you couldn't move it that far without losing a chunk of that same energy (kinda what @Space Ghost alluded to earlier with different kinds of lines I think), I can understand that, although I'm not sure of the exact numbers. I feel this is largely irrelevant to the point discussed in the earlier video (a small loss in energy is still OK in that scenario IMO), but maybe I'm wrong.




    On another side-note, I have a question for you Bitcoin folks. A less hostile one at that. :) I've tried to be careful in the way I talk about the energy used by Bitcoin, albeit maybe less successfully than I intended. I understand why Bitcoin mining would be fairly energy intensive, but how is a Bitcoin transaction processed exactly? I believe I somewhat understand the general concepts of PoW, PoS, PoA, blockchain, etc., but I never bothered to get too deep into the specifics. As I believe Bitcoin has a limited (finite?) supply (though you can always break coins into fractions?), I'm curious what the energy requirements would be if we only had to worry about actual transactions. In other words, Person A transferred xyz bitcoins to Person B. How much energy is used on average? I took some figure I found online about "Bitcoin transactions," which compared it to the energy required for traditional transaction processing, and of course it wasn't a pretty comparison for Bitcoin. As I said before, I imagine a traditional non-blockchain implementation for transaction processing would always have the advantage in this area, though I wouldn't mind having a better understanding of what exactly is going on in a Bitcoin transaction.
     
  15. Space Ghost

    Space Ghost Contributing Member

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    You have to take OpSec serious when it comes to the **** Amazon is into. It wouldn't be wise to put up a few chicken coops in the middle of a desert next to a hydro dam and fill it with equipment containing sensitive information. Mining farms are just filled with computers crunching useless numbers. Maybe all you really need is round the clock rent a cop to keep the riff raff away. The only thing of value there physically are serialized miners. It will eventually get to a point where these miners are highly sought after and then security measures will have to be taken more seriously.

    One of those videos makes an interesting point; Economies will start forming around the cheapest forms of renewable energy instead of strategic ports.
    yw
    I would say hash rate per TX is irrelevant in this context. I would imagine hash rate per TX would only be used to push the marginal miners offline or online. Hash rate is more tied to price and TX rewards (lets call the yields) would be a small chunk of the block reward. If yields go up, people get pissy and start finding other ways to move their crypto outside of BTC thus driving the value of BTC down. Value goes down, least profitable miners go offline, and TX costs start lowering because less people are using bitcoin.

    You start by creating a digital key, which can be done in countless ways.(password) Then you take that password and create an address (user name). Then you put that address into a digital wallet. Digital wallets have tons of features and its primary purpose is to communicate with the bitcoin nodes, which anyone can run. A digital wallet is basically an interface that allows the user to interact with the bitcoin network. There are tons on the app store. some are very basic and some have some really cool features, like dual signatures or 3/5 signatures (takes 2 peoples key to transfer or 3/5 peoples key to transfer. commonly found in organizations). If you want to transfer bitcoin to someone, you scan their QR Code/address (user name). You enter the amount you want to send and wallets will typically tell you what the expected TX costs will be. Then the wallet does a quick check to make sure the bitcoin isnt already in the pool or already spent by checking it against the blockchain history via the nodes. (some wallets can bypass this and send it straight to the pool. But that isnt wise). Once the wallet is satisfied, it send its to the TX pool. Here the miners scoop up 2760 TX's(more accurately, 1M block worth of data). It usually picks up the ones with the highest fees. People who mine join Miner Pools. Each pool tries to solve a complex algorithm generated by all the TX addresses they picked and other aspects. Its basically brute force. The mining network (which everyone agrees to run a certain code and revision) raises and lowers the complexity of the algorithm to balance a 10 min avg TX time (this happens over a 2 week moving span so the block time can be a couple mins +/- 10 mins depending on how fast miners are coming online on a daily basis). The first miner to solve the problem announces it to the network. The network confirms the solution and mints a new block and places all those TX's onto the official block chain. Those TX's are removed from the TX pool and the process is repeated. If someone tries to hack the code and submits a false block, they are simply blacklisted from the network. Imagine a classroom full of kids all competing to solve 10 problems on a piece of paper. One kid can just randomly get up half way and claim to have all the solutions. The smart kids will keep working until his solution is confirmed. Once the network has confirmed the solution, the next challenge will use the basis of that newly minted block address, as everyone will. After several new blocks (some exchanges require 3 blocks), the coin/transaction is deemed safe and complete.
     
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  16. RC Cola

    RC Cola Contributing Member

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    That's actually a great point about the sensitive information.

    That said, I guess I have a different mental model of what a Bitcoin mining farm looks like. Is it really just some chicken coops? Given how much energy y'all were saying is being stranded, I guess I imagined bigger facilities. Not some chicken coops with a rent a cop. I mean I'm sure there might be some of those, but to maximize things, I guess I just assumed something bigger. And to your point, I'd be surprised if the miners weren't highly sought after. Not sure a single rent-a-cop will do it...especially if it is an underpaid one.

    Are there actual breakdowns of how many facilities there are like this, how much energy they're able to use (from these stranded energy sources), how they manage to maintain the farms, etc.? I'm kinda getting tired of imagining things and maybe it would be beneficial to get an actual look on how this is done now vs how people on the internet theorize it might work.

    Thanks for all the details. Probably a bit more than I needed, but it jogged my memory on how this type of network works.

    Given the need to always process a complex algorithm to complete a transaction (or rather a batch of transactions), it does seem like this kind of system is inherently very inefficient (from a computational standpoint) compared to how traditional transactions are done. I would guess the actual transaction logic (i.e., "I am Bill and I want to send xyz units to Jake") is probably fairly similar for both systems, but the Bitcoin network would require the additional processing described above. You did mention that Bitcoin is better as a store of value than a currency for everyday transaction, so I suppose that's not super unreasonable. I don't value the properties this system provides and would rather just have something more traditional or, if it had to be blockchain, perhaps something based on PoA I guess (which doesn't seem crazy different from traditional systems from what I understood). But I know some people really value the properties that a PoW system like the Bitcoin network can provide.
     
  17. Invisible Fan

    Invisible Fan Insider Newsletter™ 2X Diamond Member

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    It's mostly the strength of the dollar. All asset classes outside treasuries suffer with stronger dollar relative to other currencies
     
  18. Invisible Fan

    Invisible Fan Insider Newsletter™ 2X Diamond Member

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    Im wondering if you or anyone here knows what happens during a risk off or panic event when it comes to rehypothecation.

    Lets say there's a temporary crash that happens like housing where the collateral value lent is much lower than the current and stressed value. Since this is zombie apocalypse, the lender would then default on the loan and give up its now cheaper bitcoin.

    But if you're an investor, you could freak out and pull out your bitcoin. In that sense, its like a gold run since the Bank fractionally lent out your btc to 5-10 other clients or reinvested it.

    I guess the short of it is whether there are stress tests to blockfi and how much and how long it it can handle violent swings in both price and macro conditions.

    Thinking about it some more, i guess it's only net negative for the lender if btc rebounds above the 50% lending price while you lose it from some form of default. Is that the only risk?
     
    #4958 Invisible Fan, Mar 24, 2021
    Last edited: Mar 24, 2021
  19. DonnyMost

    DonnyMost clean your room bucko

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    Feels like the only reason bitcoin would fail now is because another coin comes along and supplants it.
     
  20. Space Ghost

    Space Ghost Contributing Member

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    Good question. Much of it depends on the bank. There are plenty of shady practices going on out there. Blockfi/Gemini are pretty solid. Once Coinbase has its IPO, it will become one of the strongest banks out there. Binance Global has some very lucrative but also many shady lending platforms. Its why Bianance coin is around #3 now.

    Crypto borrowing is not cheap. The lowest rates are around 4.5% for a 20% LTV. 50% LTV's could run up to the lower 20's. It all depends on what you want to do with that cash. Reinvesting into crypto is just doubling down on your gambling. Blowing it on vacations or other consumables is not wise either.

    M1finance allows you 35% LTV against stocks at 2 - 3.5% with 1% origination fee. Never has lending and borrowing been so cheap and easy.
     
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